There are two types of small business startup loans that are typically used, one is risky for the business owner, the other for the investors who finance the operation. 

o) Debt financing: Your financial institution loans you a certain amount of money, which must be paid off by a certain date. These loans are high risk for the business owner, as these loans must be paid off whether the business is successful or not.

o) Equity financing: This method of startup funding is far less risky for the business owner, and more risky for the investors, who agree to buy up a portion of the business. If the business flourishes, the investors will typically make much more money than interest rates. This means that if a business is successful, it costs far more than a much less successful business.

When using equity financing, keep in mind that the investors are going to be actively involved in your business, as it is in their best interest to ensure your business succeeds. It is important to seek investors who are interested in what you are interested in. If you want the business to last for twenty years, the investors should also want the business to last that long. This prevents disputes with your investors, which can cause a myriad of problems.

Despite the above mentioned loan methods, there are far more effective, and much less risky loans that one can take.

1) Friends and family can be the best source for loans and equity agreements. A family member may only request the loan be repaid in full, with no additional interest or terms. A family member or friend will also be more likely to see eye to eye in an equity agreement.

2) Take advantage of those credit cards! The trick with using a credit card is to use them as temporary financing, rather than long term financing. 

3) Lease before you buy. If your business requires vehicles, for example, lease them instead of buying. Even equipment required to run a business can be leased (this includes computers!)

4) Private lenders are far more likely to take on a high risk loan than a bank. A private lender may specialize in only a few industries, and as such, are more likely to see the potential in your business.

As you can see, there are many ways to secure business startup funding, some of which are risky, some of which are not. The trick to finding funding is to be as prepared as you can be, and to explore all avenues of potential funding.